Investment management and attorneys

If you are an attorney under a Lasting power of Attorney (LPA) for an older person, perhaps a parent, and have become responsible for dealing with their financial affairs, this can sometimes seem like a daunting task, particularly so if the donor of the LPA has an investment portfolio.

So what points should you bear in mind? Firstly, remember that you cannot act under the LPA until it has been registered with the Office of the Public Guardian (OPG). Once registered you will need to produce a certified copy to each of the financial institutions with which the donor holds accounts. You may also be required to produce evidence of your identity, depending on the organisation’s anti-money laundering compliance policy.

One important point to bear in mind is that you should keep the donor’s property separate from yours or that of any third party, so all accounts and investments should remain in the donor’s name. In a 2013 judgment the senior judge of the Court of Protection also suggested that attorneys should ensure that any institution in which the donor’s money is invested should be regulated by the Financial Conduct Authority and should ensure that the Financial Services Compensation Scheme (FSCS) applies to any applicable investment. The FSCS will provide protection for the first £85,000 of an investor’s cash deposit if the institution in which a deposit has been made should become unable to repay its deposits.

As far as investment decisions are concerned, in the same Court of Protection case referred to above, Senior Judge Lush reminded attorneys that they cannot do what they like with the donor’s money, nor can they proceed on the basis of doing whatever the donor might have done had he retained capacity. The over-riding principle that an attorney must bear in mind is the need to act in the donor’s best interests.

Senior Judge Lush also suggested that attorneys should take appropriate professional investment advice and to act as trustees are statutorily obliged to do in that respect; the more complex the donor’s affairs, the greater is the need for advice. If the donor’s investments are managed on a discretionary management basis you should check the LPA to see if you have power to delegate investment decisions. Unless there is specific power in the LPA the attorney does not have the ability to delegate and investment decisions will need to be taken by the attorney personally.

Finally, bear in mind that attorneys have no power to make gifts (other than the normal birthday and Christmas gifts), so any significant gifts, say for tax planning purposes, will need to be authorised by the Court of Protection.